U.S.-China Tariff Impact on Sourcing Fixtures

Abstract:

China and the U.S. are locked in a trade war, with each country introducing tariffs, taxes, and quotas on goods traded with the other. These new trade arrangements are adversely impacting multiple industries and the global economy at large. Due to a high trade deficit and cheaper imported products, the domestic manufacturing sector was getting weaker. In order to boost the economy and reduce the deficit, the U.S. government opted to impose tariffs on imported goods. Since the trade deficit with China is relatively high, taxing goods coming from China was the U.S. government’s main aim. This article details the impact of China tariffs on fixtures.

Introduction:

U.S. imports represent 31.4 percent of the world imports (ranked 1 st) for furniture. The U.S. has been importing these materials from China, Canada, Mexico, and Southeast Asian countries (negative trade balance of $-22 billon in 2017). The U.S. also increased tariffs on all Chinese products to 25 percent (from the previous 10 percent).

Tax Impact Overview:

Acrylic Display (Classified as Furniture) Imported as Complete Units: As long as the fixtures are imported as complete units, they would be classified under the material that imparts the “essential character” of the item. If the “primary” material is plastic/acrylic, then it would be classified as plastic furniture (HTS 9403.70.xx), and there would be no additional tariff. This can change depending on the fourth list of Section 301 tariffs on $300 billion worth of Chinese imports, which is yet to be finalized.

• Acrylic Not Classified as Furniture: Duty on this could be 5.3 percent, a “standard” one that has been in place.
• Acrylic Display in Parts: Previously, 10 percent was levied; it was revised to 25 percent in May 2019.
• Metal and Wood Displays: Classified as furniture of metal/wood, these are levied with a tax of 25 percent as mentioned in List 3.